Miranda Barker OBE Chief Executive
@elancschamber
CARBON PLANS ARE NO LONGER
Mohsin and Zuber Issa
SHOT OVER ASDA AND EG GROUP MERGER
UNION’S WARNING
The union representing workers at supermarket giant Asda has written to the business secretary warning any merger between the company and petrol forecourts business EG Group would be “deeply irresponsible”.
The Blackburn based Issa brothers and their private equity partners TDR Capital own both businesses and there have been unconfirmed reports of a planned £12bn merger as part of ongoing efforts reduce the EG Group’s debt burden.
In a letter to business and trade secretary Kemi Badenoch, the GMB union has warned a “debt-laden” merger would threaten the UK’s food supply, fuel prices and 100,000 jobs. The union says it is concerned that the merger could increase Asda’s existing debt burden, thought to be more than £4.7bn.
In its letter the GMB warned that the £7bn EG debt is due to be refinanced in 2025 when interest rates are likely to be significantly higher, which could place the ‘big four’ supermarket in a “perilous financial position”.
The GMB has also called on the minister to ensure that any merger between Asda and EG Group’s UK division is fully investigated by the Competition and Markets Authority (CMA). Nadine Houghton, GMB national officer, said: “The potential Asda and EG Group merger is likely to saddle the company with a massive, unsustainable debt burden.
“Allowing it to go ahead would be deeply irresponsible. Firstly, it risks the jobs of more than 100,000 employees.
“As one of the largest private sector employers in the UK, the future sustainability of the business is a matter of national, public interest.
“Secondly, it would place the future of the UK’s food supply at risk by loading even greater debt on to one of the UK’s ‘big four’
supermarkets. Finally, it will have a chilling effect on competition for fuel prices by creating a ‘super retailer’ of more than 700 petrol stations.
“This merger is not in the best interests of Asda as a business and certainly not in the best interests of the public and consumers.
“GMB calls on the Secretary of State to ensure the CMA investigates thoroughly - and that additional investigatory and enforcement powers are given with the Competition and Markets Bill now coming to the floor of the house.”
A merger deal would create a vast group with 581 supermarkets, 700 petrol forecourts and more than 100 convenience stores. Mohsin and his brother Zuber, founders of EG Group, based in their home town of Blackburn, partnered with London based TDR Capital to acquire Asda in 2020 in a deal which valued the business at £6.8bn.
From just one petrol station in Bury, the brothers have built EG Group into a global convenience retailer. In March this year EG Group announced it had agreed to the sale and leaseback on a portfolio of its sites on the east coast of the USA to Realty Income Corporation for a gross consideration of approximately $1.5bn.
This portfolio – which EG America will continue to operate and trade – is made up of 415 store assets. The group said it would use the net proceeds to repay debt and the transaction was in line with management’s commitment to reduce total net leverage through debt reduction and free cash flow generation.
Commenting on the deal, Zuber Issa said the announcement “demonstrates the progress we continue to make to put in place a robust capital structure for the medium term that will underpin our long-term strategy and represents an important first step in this process.”
LANCASHIREBUSINES SV
IEW.CO.UK
A ‘NICE TO HAVE’ Beware the surface commitments of green washing, the distraction of eco-badges, and the hype of shallow pledges.
Real commitments to drive down the climate impact of business are becoming a procurement reality. Whilst government Carbon Reduction Plans are right now the benchmark for large scale public sector contracts beyond £5m, the NHS has also picked up this target.
From April 2024 the NHS will extend this requirement for a Carbon Reduction Plan to all procurements. The rest of the public sector will follow. If you’re a Lancashire business the Chamber Low Carbon team has government funded support to help you create your Carbon Reduction Plan now.
A Carbon Reduction Plan is a report of your carbon emissions, and your plan to reduce them. Beware, the contracting authority will follow up on your plan and check you have stuck to it.
Understanding your emissions is where the carbon footprint comes in, to help you see what your business is responsible for directly, through the energy you purchase and through your supply chain.
Soon you will be judged on your carbon emissions management when you apply for tenders and contracts, and insurance or for funds - that’s what’s the banks’ commitments to those ESG standards mean: that they want to assess investment through a socially conscious lens.
Taking control of your carbon footprint is also taking control of your energy bills, changing behaviours, driving up efficiency, even generating your own electricity on site - all will help your business survive.
And that is exactly what it is - a matter of survival, with the reduction in the government’s energy support by 85%, we are seeing some business bills escalate by 400% this month.
Act now – before it costs you more than you can afford.
Call us on 01254 356487
or visit
chamberlowcarbon.co.uk info@chamberlowcarbon.co.uk
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